Slightly Stronger, Narrow Range, CPI & RBA Lowe’s Testimony On Wednesday

ACGBs are slightly stronger (YM flat & XM +2.0) but off Sydney session's bests as US tsy futures trade slightly lower in a narrow range in Asia-Pac trade. With local headlines and economic data light today, local participants have watched US tsy futures for guidance as the market digests news of a debt ceiling deal.

• Cash tsys are closed today for the Memorial Day holiday. US tsy futures are at 112-10+, -2+ versus Friday’s close, after initially cheapening to 112-03+.
• Cash ACGBs are 1-2bp richer with the AU-US 10-year yield differential -2bp at -9bp.
• Swap rates are 2-3bp lower with the 3s10s curve 1bp flatter and EFPs slightly tighter.
• Bills strip twist flattens with pricing -2 to +2.
• RBA-dated OIS pricing is flat to 2bp firmer for meetings out to October but 1bp softer for meetings beyond.
• The local calendar sees April Building Approvals released tomorrow. Overall, an increase in non-high-rise constructions is expected to contribute to a 2% m/m rise in total dwelling approvals. However, the high-rise sector remains uncertain and poses a significant variable in the equation.
• However, the focus of the week is likely to be RBA Lowe’s appearance and April CPI data on Wednesday.